Vanguard Index Fund Portfolios

Below are some suggested portfolios to achieve diversification. The percentage numbers are not prescriptive, but merely suggestions. You can tweak these number depending on your goals, age, and risk tolerance profile. Please remember that, even if you divide  your asset allocation equally among all your funds, you will still come out ahead simply for getting started. So, don't sweat too much into percentages. Eventually, as you buy and hold your investments for longer time frames, you can tweak your asset allocation by diverting more or less money.

 

Portfolio #1: Target Retirement Date Fund (Recommended)

If your life is extremely busy, and you love simplicity, then simply invest in a Target Retirement Date fund. Target Retirement Date funds are broadly diversified because they are made of up of multiple funds. These funds gradually become more conservative as your year of retirement approaches and reduce risk automatically.  Depending on your target retirement date and your risk profile, find a suitable fund and start investing in it. More on fund of funds investing.

I recommend this portfolio to just about everybody even though I personally have a complex 9+ fund portfolio. Over the course of 5 years of investing, I've realized the simplicity trumps additional slicing and dicing as well as tinkering of the portfolio that is required when you have so many funds in your portfolio. At some point in the future, I'll simply re-allocate my portfolio to a Target Retirement Date portfolio.

Fund	Aggressive	Moderate	Conservative
Vanguard Target Retirement Date Fund	100%	100%	100%

 

Portfolio #2: Simple Three Index Fund Portfolio

If you like a little bit of control over your asset allocation, here is a simple three index fund portfolio. These funds cover the entire gamut of financial markets.

Fund	Aggressive	Moderate	Conservative
Vanguard Total Stock Market Index Fund	40%	40%	30%
Vanguard Total International Stock Market Index Fund	40%	30%	30%
Vanguard Total Bond Market Fund	20%	30%	40%

 

Portfolio #3: Simple Four Index Fund Portfolio

If you like to diversify into the real estate market without purchasing a physical property, here is a simple four index fund portfolio. See A Primer on Real Estate Investment Trusts (REITs).

Fund	Aggressive	Moderate	Conservative
Vanguard Total Stock Market Index Fund	40%	40%	30%
Vanguard Total International Stock Market Index Fund	30%	30%	30%
Vanguard Total Bond Market Fund	10%	15%	30%
Vanguard REIT Index Fund	20%	15%	10%

 

Portfolio #4: Six Index Fund Portfolio

If you like to diversify and further control over your asset allocation, here is a six index fund portfolio.

Fund	Aggressive	Moderate	Conservative
Vanguard S&P 500 Index Fund	20%	15%	10%
Vanguard Large Cap Value Index Fund	10%	15%	10%
Vanguard Small Cap Value Index Fund	10%	10%	10%
Vanguard Total International Stock Market Index Fund	30%	30%	30%
Vanguard Total Bond Market Fund	10%	15%	30%
Vanguard REIT Index Fund	20%	15%	10%

 

Portfolio #5: Eight Index Fund Portfolio

Here is a eight index fund portfolio that adds separate international stock funds.

Fund	Aggressive	Moderate	Conservative
Vanguard S&P 500 Index Fund	20%	20%	15%
Vanguard Large Cap Value Index Fund	10%	15%	15%
Vanguard Small Cap Value Index Fund	10%	5%	5%
Vanguard Emerging Markets Index Fund	10%	5%	3%
Vanguard International Value Index Fund	10%	15%	12%
Vanguard Developed Markets Index Fund	10%	10%	10%
Vanguard Total Bond Market Fund	10%	15%	30%
Vanguard REIT Index Fund	20%	15%	10%

 

Portfolio #6: Nine Index Fund Portfolio

This portfolio will give you finer control over both domestic and international stock markets.

Fund	Aggressive	Moderate	Conservative
Vanguard S&P 500 Index Fund	20%	15%	15%
Vanguard Large Cap Value Index Fund	10%	15%	10%
Vanguard Small Cap Value Index Fund	5%	5%	5%
Vanguard Small Cap Growth Index Fund	5%	5%	5%
Vanguard Emerging Markets Index Fund	10%	5%	3%
Vanguard International Value Index Fund	10%	15%	12%
Vanguard Developed Markets Index Fund	10%	10%	10%
Vanguard Total Bond Market Fund	10%	15%	30%
Vanguard REIT Index Fund	20%	15%	10%